The figure reached €362 billion (£283bn) as at 30 September 2014 according to Morningstar UK. The document entitled 'A Guided Tour of the European ETF Marketplace' also showed the European ETF market remains highly concentrated, with the top three providers managing more than two thirds of the assets.
Researchers said the need for innovation and product differentiation has increased, with strategic beta, also known as 'smart beta', becoming the new battleground for providers.
More investors have been using the ETF vehicle strategically, specifically as core portfolio building blocks, the authors said, while providers have been cutting fees and launching low-cost 'core' ETF ranges.

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Hortense Bioy, Morningstar's director of European passive strategies research, said: "The European ETF marketplace has clearly entered a new phase in its development.
"Over the past two years, we have seen an evolution in ETF usage, increasing competition, and heightened product differentiation.
"Regulation has spurred much of this change, as new types of investors are adopting the vehicle."
The report also stated that the ETF providers have been meeting concerns about counterparty risk in ETFs by adapting practices, such as switching from synthetic to physical replication methods and capping or, in some cases, stopping securities lending activity altogether.
Mr Bioy said: "Our report details how ETF providers are responding to this evolving landscape, and also aims to shed light on their portfolio management practices. We hope our work will assist investors in their ETF provider selection process."

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